{"id":216327,"date":"2022-09-22T08:30:01","date_gmt":"2022-09-22T07:30:01","guid":{"rendered":"https:\/\/www.theindustry.fashion\/?p=216327"},"modified":"2022-09-22T20:26:56","modified_gmt":"2022-09-22T19:26:56","slug":"bank-of-england-set-for-bumper-interest-rate-hike","status":"publish","type":"post","link":"https:\/\/www.theindustry.fashion\/bank-of-england-set-for-bumper-interest-rate-hike\/","title":{"rendered":"Bank of England set for bumper interest rate hike"},"content":{"rendered":"<p><strong>Markets think the Bank of England will unveil the biggest hike in interest rates for over three decades when its decision makers meet on Thursday.<\/strong><!--more--><\/p>\n<p>The Monetary Policy Committee (MPC) is expected to increase rates by 0.75 percentage points to 2.5%.<\/p>\n<p>It would be the highest interest rate that the UK has had since the financial crisis. In December 2008, the base rate was slashed from 3% to 2%. It would also be the highest single increase to interest rates since 1989.<\/p>\n<p>Samuel Tombs, Chief UK Economist at <a href=\"https:\/\/www.pantheonmacro.com\/\">Pantheon Macroeconomics<\/a>, said: \u201cInvestors think the most likely outcome is that the MPC will increase the Bank rate by 75bp (0.75 percentage points) on Thursday.\u201d<\/p>\n<p>But he said that economists are expecting a smaller rise, to 2.25% \u2013 the same 0.5 percentage point change as the Bank\u2019s last hike.<\/p>\n<p>\u201cFor a start, hawkish surprises from the MPC have been far less common than dovish ones over the last year. In addition, Governor Bailey openly referred to a 50bp hike ahead of the August meeting, but has not given markets a nudge to price-in a 75bp hike.<\/p>\n<p>\u201cWe think that the MPC still will deem a 50bp increase to be consistent with its pledge to act \u2018forcefully\u2019, if it sees signs of more persistent inflationary pressures.\u201d<\/p>\n<p>ING economist James Smith said that the Bank of England will have to react to recent falls in the price of the pound. Sterling hit a new 37-year low against the dollar on Friday.<\/p>\n<p>Smith said: \u201cThe Bank of England meeting is crucial. It will tell us not only how worried policymakers are about the slide in sterling and other UK markets, but also how the Government\u2019s decision to cap household\/business energy prices will translate into monetary policy.\u201d<\/p>\n<p>\u201cWe narrowly favour a 50bp hike on Thursday, taking the Bank Rate to 2.25%, although 75bp is clearly on the table and we would expect at least a couple of policymakers to vote for it.\u201d<\/p>\n<p>He said that rates will likely rise again in November and December, hitting 3% by the end of the year.<\/p>\n<p>The decision to hike interest rates is a bid to keep inflation under control. It is the best tool that the Bank of England has to steer inflation \u2013 currently at 9.9% \u2013 back to its 2% target.<\/p>\n<p>But the decisions will also have major impacts on people\u2019s finances, not least those with mortgages who will need to start paying more for their home loans.<\/p>\n<p>The MPC was originally set to announce its decision on 15 September, but delayed this for a week due to the Queen\u2019s death.<\/p>\n","protected":false},"excerpt":{"rendered":"<p> [&hellip;]<\/p>\n","protected":false},"author":68,"featured_media":213728,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[10585,6,10494],"tags":[10733,11222,24182],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bank of England set for bumper interest rate hike - 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